The Japanese economy was in recession for most of 2004 as official figures this morning showed three successive quarters of negative growth, as slower exports and consumption hit output.
Japan's Cabinet Office said the economy shrank 0.1% in the three months to December compared with the previous quarter, giving an annual drop of 0.5%. The figures were worse than analysts had expected.
Net exports - exports minus imports - and consumer spending each contributed a negative 0.2 percentage points to the GDP data in the period.
The government also revised the July-September quarter figures to a 0.3% contraction from the previous estimate of 0.1%, following a fall of 0.2% in Q2, putting the country into recession.
The widely accepted technical definition of a recession is two consecutive quarters of economic contraction but officials said the government was not ready to use the word.
The three quarters' downturn is the worst since the economy contracted for four consecutive quarters from April-June 2001 to January-March 2002, when it was hit by the bursting of the technology bubble.
For the whole of 2004, however, GDP expanded 2.6%, the highest growth rate since 1996, when it was up 3.4%.
'There is no change to our understanding that the economy is basically on a gradual recovery path,' Prime Minister Junichiro Koizumi told reporters.